HomeMy WebLinkAboutItem 4.8 - 1998 Amendment to the Hotel Incentive Program
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STAFF REPORT
CITY COUNCIL
DATE: May 15, 2018
TO: Honorable Mayor and City Councilmembers
FROM:
Christopher L. Foss, City Manager
SUBJECT:
Amendment to the Hotel (Transient Occupancy Tax) Incentive Program
Prepared by: Suzanne Iarla, Management Analyst II
EXECUTIVE SUMMARY:
The City Council will consider amending the Hotel (Transient Occupancy Tax) Incentive
Program to aid in attracting investment and assisting in the development of hotels in the
City.
STAFF RECOMMENDATION:
Adopt the Resolution Approving the Amendment to the Hotel (Transient Occupancy
Tax) Incentive Program.
FINANCIAL IMPACT:
None.
DESCRIPTION:
On November 7, 2017, the City Council approved the Hotel (Transient Occupancy Tax)
Incentive Program to aid in attracting investment and assisting in the development of
hotels in the City.
Since that time, Staff has spoken with a number of interested hotel developers. Through
these conversations, Staff has recognized a few development scenarios that meet the
intent of the new program but would benefit from flexibility regarding the meeting space
requirements for large, high quality hotel developments.
Following is a summary of the adopted Program's eligibility and reimbursement limits:
Program Eligibility:
1. Hotel must be of a quality that it meets a four (first class) / three star (comfort
new hotel) or four (first class) / three diamond (comfort new hotel) hotel rating or
higher under the rating criteria established by the American Automobile
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Association (AAA), JD Power and Associates, or comparable hotel rating entity
which includes hotel operations on a 24 -hour per day, 7 days a week basis with
housekeeping services, food and beverage services, high-quality finishes, room
services, banquet and meeting services, includin g at least 10,000 square feet of
meeting/banquet space, concierge and bell services, and parking services.
2. Hotel must provide independent, third-party, certification acceptable to the City of
the level of the quality of the new hotel as a four (first cl ass) / three-star (comfort
new hotel) or four (first class) / three diamond (comfort new hotel) hotel as
defined above.
3. Hotel must have 125 or more rooms.
4. Existing hotels seeking funds for redevelopment must measurably and
demonstrably improve the quality of the hotel through either increased capacity
or ability to charge higher room rates, and/or enhancements to the hotel’s ratings
by AAA, JD Power, etc.
Program Limits:
1. The Transient Occupancy Tax (TOT) rebate will be no more than 70% for a 4 -
star hotel and no more than 50% for a 3 -star hotel. Renovated hotels are eligible
to receive a TOT rebate of 50% of the increment above existing TOT levels for
up to 10 years.
2. The term of the rebate shall be no longer than 20 years for a 4 -star hotel, and no
longer than 15 years for a 3-star hotel. Any change in star rating below 3 stars for
the applicant throughout the lifetime of the agreement will result in termination of
the agreement. A reduction from a 4-star hotel rating to a 3-star hotel rating will
result in a reduction of the term of the TOT rebate, consistent with that of a 3 -star
hotel.
3. The amount of the TOT rebate shall be no greater than the funding gap.
4. The Applicant must enter into a binding agreement with the City.
Staff recommends the following changes to the Program:
1. Edit Program Eligibility #1 to clarify that the hotel must operate continuously
and also must offer certain services, however, services such as food and
beverage, do not need to be available on a 24 -hour per day, 7 days a week
basis.
2. Add Program Eligibility #5 which would allow high quality hotels who meet the
intent of the program, but may not meet the 10,000 square feet of
meeting/banquet space requirements, to be evaluated on a case -by-case
basis by the City Manager or his/her designee to negotiate the terms of a
draft agreement.
At the April 3, 2018 Economic Development Committee special meeting, Staff
presented the proposed changes to the Program for the Committee’s consideration. The
Committee received the presentation and supported the amendments to the Program.
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NOTICING REQUIREMENTS/PUBLIC OUTREACH:
None.
ATTACHMENTS:
1. Resolution - Amending the Hotel (TOT) Incentive Program
2. Exhibit A to Resolution - Hotel (TOT) Incentive Program